Market Mantra

#Buy the shares of Adani Wilmar Ltd near the CMP of Rs.347 for targets above Rs.400, since the 4th quarter of FY25 is expected to be better than Q3FY24.  SL: Rs.330.

The good news is that the union government had some months back allowed the import of edible oils at lower tax rates until March 2025.

The price of the shares of Adani Wilmar went down due to sudden drop in the price of Palm oil which is affected by price movements in related crude oils; as they compete for a share in the global vegetable oils market. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. However, this is past and the company has turned around in the last quarter.

In the recent months the signs of weakening demand growth, and Eight OPEC+ members led by Saudi Arabia and Russia saying they would start phasing out 2.2 million barrels per day in production cuts beginning in October, was the primary cause of fall in Brent Crude prices.

Under the plan, more than 500,000 bpd of crude oil would return to the market by December, and 1.8 million bpd would come back by June of 2025. 

However, there's a silver lining: if at the end of August, fundamental picture looks worse than what we have now, they would pause that addition. So, there's less chance of crude oil going too low from the current market price.

Incidentally, when OPEC+ took the decision it did over the weekend, in a reasonably well-supplied crude market, traders factored in the macro picture alongside a dwindling risk premium, with talk of a ceasefire in Gaza, this actually pushed down the crude oil price. 

Meanwhile, an aide to the Israeli prime minister confirmed on Sunday that Israel had accepted a framework deal for winding down the Gaza war, although the Israeli side called it a flawed deal.

Now the data on U.S. fuel consumption is in focus to chalk the future trajectory of crude oil, especially in light of the start of summer driving season. 

Hence, I feel the brent should rebound and settle above $80 per barrel, triggering a price hike in Palm oil. 

Anyway, Adani Wilmar, is into the manufacturing and selling of cooking oil. Fortune”, its flagship brand, is the largest selling edible oil brand in India. Adani Wilmar is one of the fastest growing packaged food companies in India. Mundra is the one of the largest single location refineries in India with a designed capacity of approximately 5,000 tonnes per day.

#Regarding the domestic stock markets, my personal opinion is that though the Sensex is down 2193 points, but the NDA alliance is comfortably above 272 mark. Thus initial trend do indicate the formation of the next government at the centre by the NDA, albeit with less MP strength. But this will give more teeth to the opposition parties, which is good for democracy. 

#Adani and Ambani group companies would continue to dominate for the next 5 - years. Hence, use dips to buy good stocks.